Merchant Cash Advance: Seven Advantages Over Business Loans

In any form of business, funding is one of the most important criteria. Funding can be of different types, but business turnover is a vital factor for selecting such funding options. Personal financial support is not always possible for everyone and it is also not a recommended option for any business. Among the external funding options, business loans from financial institutions or banks and Merchant Cash Advance are the two options. In many cases, getting a loan from any bank is almost impossible for the small business owners. In such cases, Merchant Cash Advance is one of the best forms of funding option.

What is a Merchant Cash Advance?

MCA was originally prepared as a lump-sum payment in lieu of a percentage of future credit or debit card sales that has been agreed. However, the term at present describes a variety of small business financing options with short payment terms. To grow a business, cash flow is very important and for that different aid is being taken, among which Merchant Cash Advance is the most popular. This type of funding is used by the entrepreneur when he lacks credit rating or collateral. After signing the contract, the establishment receives some amount of finance and in turn, the provider possesses the right to have a part of the credit card sales of the company every month till the amount of contract is reached.

Top seven advantages of MCA over business loans

  • No credit or collateral is required – As, the type of funding is not dependent on any credit score, rather on the future credit card sales, so, this is a safe option to get cash. Whatever, the type of credit score a business have, it does not affect this funding process.
  • Fast cash access – Like commercial loans, there is not so much of paperwork. While a loan can take around months to get processed, this type of funds requires minimal time to get processed. As a result, one can avail and access fast cash in times of immediate fund requirements.
  • Approval rate is high – Unlike commercial loans, there is minimal or negligible amount of rejection in MCA. The type of funding has usually highest form of approval rate as advances are rarely denied.
  • Collection is as per revenue generation – For any business loans, company with low sales rate, faces problems for monthly payments. In case of MCAs, repayment happens when the company really makes money.
  • The funds available can be used without any restriction– The funds in this case can be used for buying inventories, growing your business or any other purposes, instead of any fixed areas as in commercial loans.
  • Simple and hassle-free process – applying for a commercial loan and getting approval for the same is not an easy task. This might take months and sometimes rejected also. However, MCA is also a funding option for small businesses that is simple as well as hassle-free. This is revenue based and so you do not have to think about the payback.
  • Affordable – Many entrepreneurs have fears that MCA is highly expensive, but in reality this is beneficial and affordable. The affordability allows business people to remain viable without cutting their budgets as like loan payments.

Need To Secure Capital for Your Business? Opt For Merchant Cash Advance

So you are a small business owner in need of capital now. Well, we all understand that beyond making marketing researching and a strong business plan, one of the most intimidating parts of businesses is its financial aspect.  While most of the small businesses fail because of making a wrong financial decision, others take a step back due to lack of their funding system. In order to pursue your dream and let it take the right track, opting for the right financial system or including the merchant cash advances can simplify it.

What Exactly Is Merchant Cash Advance?

Let’s first make it very clear that even when merchant cash advance can fulfill your funding needs, it is not actually a loan. Here small business owners receive capital or upfront cash where the repayment will be made from their future sales. Unlike the bank loan system where there is interest added to the payment, this is different. Here the merchant who lends you will make back from the sales percentage that your business makes.

Since the advances are agreed upon a fixed percentage, these are automatically taken out when your business is making sales. It keeps repayment on schedule, along with the merchant is aware of your business sales. In case your business cannot make money, they too will not be able to make money. This is the reason why it is said as a wise decision for small business owners.

Advantages of Merchant Cash Advance:

There are myriad of reasons that make this funding process an appealing choice.

The Speed of Obtaining Cash: Starting a business means the need for money from the very first day and when it is about obtaining cash in the least time, merchant cash advance stands out. If you have decided to opt for it, you can acquire capital within hours. When compared to traditional banks, getting funds can take weeks. Moreover, merchant lending does not always need huge lending companies.

mca advantages

Less Paperwork: Unlike any other funding procedure that requires tons of paperwork to deal with, merchant cash advance is completely different. During the initial days, all you need is to concentrate on your business, rather than running to banks for completing the paperwork. Undoubtedly paperwork is a must when it is about huge funding system, but here the paperwork is lesser in compared to other loan systems.

It Is A Flexible Choice: This is one of the most flexible choices made by business owners. There is no monthly payment along with more time to pay the capital as it is taken from the percentage they signed for. MCA is very effective for the businesses that have a slower pace or that have completely new service or products to offer. Since it takes time for people to comprehend the business, this funding system can be very advantageous. All you need just to sign up for small percentages of the company’s profit and you can receive funds you need for business growth.

So, it is now clear why MCA has been in demand as a great small business funding system. Not only it is a great way to secure capital, but also it gives less headache that increases in interest rates and monthly payments do. Even if you are struggling in the initial days, you do not have to think how to pay the interest as you are paying directly from the company’s profit percentage.